High-Tech Turnaround May Be On The Horizon

Though the stagnant economy has forced many companies to postpone IT purchases and upgrades, others will need to buy new technology to avoid losing their competitive edge, executives said.

"People just can't keep delaying quarter after quarter after quarter without seeing a major breakdown in their systems," said Kevin Gilroy, vice president and general manager for North America commercial channels at Hewlett-Packard.

Businesses that have leaned on support arrangements will soon realize they need new systems, according to Dan Vertrees, vice president of North America partner sales and marketing at Compaq Computer. "[Corporate America cannot operate unilaterally by extended maintenance contracts," he said.

Areas that should help lift the high-tech sector out of the recession include security, wireless LANs, mobile solutions and IP telephony, executives said.

Security remains a particular hot button, especially in the wake of the Sept. 11 terrorist attacks. "The security software market is one of the fastest-growing markets out there," said Allyson Seelinger, vice president of channel marketing and sales at Symantec. The security software vendor is seeking partners that can integrate all aspects of a security solution, from antivirus software and firewalls to intrusion detection and vulnerability assessment, Seelinger said. "There's just no way that Symantec can be local and on-site when a customer has a problem," she added.

Over the past six months, Compaq also has seen a greater security focus, as evidenced by record sales of its Himalaya fault-tolerant server lines, Vertrees said.

However, a lot of businesses have been slow to work security into their IT budgets, noted Gary Grimes, vice president of sales operations and partner management at Sun Microsystems.

"Certainly, security is a hot topic. It could provide the foundation for the IT recovery. But we're not seeing it," Grimes said.

Yet that situation could change as more companies,particularly small businesses,invest in wireless LANs, a technology fraught with security risks, roundtable executives said. The inception of notebooks and PDAs prompted major overhauls of IT management policies, which presented new opportunities for the channel. Wireless products could do the same thing, Symantec's Seelinger said.

"The same requirements will be made very, very shortly,if they haven't been made already,in the wireless world," she said. "Things like the manageability and the security. The way to protect the wireless arena is to protect the devices."

A new wave of network infrastructure buildout also is on the horizon as interest in wireless technology escalates and more IP telephony and video applications emerge, said Tushar Kothari, vice president of channels at Cisco Systems.

"It is quite clear that we are in the early innings of an Internet bandwidth boom," Kothari said. "Granted, we have overcapacity right now. But the consumption is going to catch up in the next six months or so, and there will be strong demand for Internet and network infrastructure ahead."

Still, many large customers are reluctant to commit to new technology deals, leading some vendors to sharpen their focus on the SMB market, roundtable executives said. Check Point Software Technologies, for one, is reaching out to SMB customers by adding more solution provider and service provider partners, said President Jerry Ungerman. The security software company is recruiting resellers targeting accounts with fewer than 100 employees, he said.

Among small customers, sales of Microsoft servers have exploded, said Rosa Garcia, general manager of partner sales and marketing at Microsoft. "If partners are not growing SQL Server revenue by 40 percent, they are losing share there," Garcia said.

Solution providers can sway both large and small customers to proceed with IT projects and purchases by spotlighting the return on investment, said Mark Hanny, vice president of worldwide SMB and partner marketing at IBM Software Group.

"There may not be as many deals out there, but there are real opportunities," Hanny said. "And the engagements are much more profound than they may have been a year ago."